Freight Railway Operations Planning and Control Systems

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Freight Railway Operations Planning and Control
Systems
Surface Transportation

• 23 October 2008

MultiModal Systems PracticePrinceton
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Oliver Wymans Perspective on IT in the Freight
Railway IndustryThis document presents Oliver
Wymans perspective with respect to the structure
and evolution of IT systems for the freight
railway industry
Our understanding of the current state of railway
IT systems
Understanding the railway industrys future
business environment

• Future IT requirements driven by business
  environment

Key Topics
Representative evaluation of existing IT systems
and potential areas of future focus
Oliver Wyman qualifications and potential role in
developing an IT roadmap
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There are Four Core Service Products in North
AmericaIn Europe, block trains fall into both
expedited and pipeline businesses
Service Standards /- 30 minutes /- 2 hours
Amount delivered per week/month Consistency

Defining Characteristics
Fastest scheduled service directly integrated
into the customers supply chain
Expedited
Train service coordinated with handoffs, not as
precise as Expedited
Premium
Trainload quantity replenishing a stockpile or
consistently operated block trains
Pipeline
Wagon is the lot size, slowest service, has
multiple handlings, pickup delivery
Wagonload
IT systems must be refocused to support all of
these different lines of business currently
many primarily focus on wagonload
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Freight Railway Operations Planning and Control
Systems Implications for IT strategy and
requirements
Current State of railway IT Systems
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What is the Railway of the Future from an IT
Perspective?Most railways have a large number of
inter-connected legacy systems so must approach
future systems design with these legacy systems
in mind
It is an Information Technology view of how best
to support freight railways
It is composed of new or re-architected
applications residing in a new enterprise level
systems architecture
Key Questions

• How did the existing IT systems get created?
• How complete are the existing systems relative to
  the business requirements?
• What should the future systems look like from
  various perspectives?
• IT infrastructure
• Major modules
• Capabilities of each module
• Alignment with departments and activities
• Degree of integration and interdependency
• Database structure
• Algorithms and solution strategies
• How will an evolving business environment impact
  the solution strategy?

It will be customer based, customer facing,
seamless, and encompass all aspects of the
railways activities
The starting point is to look at the current
state ofrailway IT and how we got to where we
are
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Information Technology and Freight RailwaysHow
did we get to where we are?

• Information Technology Applications have evolved
  over time
• Systems are all basically stove pipe systems
  with a batch focused legacy
• Each system was independently designed to address
  a specific issue

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Shipment (Wagon) Scheduling System
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System Wide Central Marshalling System
3
Electronic Waybills w/Wagon Movement Database
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Point-to-Point Consisting Yard Control

• Each step along the evolutionary path represents
  a new maturity level for railway IT systems
• All major railways in North America are at level
  5 in the above
• European railways exist across the spectrum from
  level 2 to 5
• Local services are often not well represented in
  systems
• Green Cargo Railion are generally at level 4 or
  5
• Each maturity level represents an increase in
  quality control and customer focus

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Over the Road Execution


1960s 2000s
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Maturity Level 1 Over-the-Road Execution Support
Systems
Base Timetable System
Dated Timetable System
Resource Management Crews Locomotives
Dispatch Train Movement Systems

• No focus on customers shipments or wagon asset
  velocity
• No visibility to wagon locations/status
• No control of wagon routing
• No workload forecasts

Cycling Repair Systems
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Maturity Level 2 Point-to-Point Consisting
Yard Control
Local Yard Inventory System
Local Yard Inventory System
Locally Maintained Marshalling System (Primarily
for Hump Controller)
Locally Maintained Marshalling System (Primarily
for Hump Controller)

• Customer perspective
• No central routing control
• Very limited visibility to wagon location/status
• No transit time prediction monitoring
  capability
• No workload forecasts beyond timeframe of
  advanced consists

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Maturity Level 3 Electronic Waybills with Wagon
Movement Database
Electronic Order Management
Empty Movement Order System
Waybill or Shipment Database
Wagon Tracking Tracing System
Wagon Location / Movement Database
Movement Reporting System

• Permits elimination of paper wagon movement
  instructions
• Requires disciplined data collection system
• Can be tied to advanced consist and yard
  inventory systems

• Provides location visibility to customers
• No system level routing control customer still
  cannot receive predictions of wagon arrivals
• Still no ability to forecast future workloads

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Maturity Level 4 System Wide Central Marshalling
System
Instructions to Yard Personnel
Wagon Arrival Information with Movement
Instructions
Yard Management System
Wagon Movement or Departure Information
Centrally Maintained Marshalling Plan by Yard

• Ensures consistent routing of all wagons
• Eliminates need for routing clerks at yards
  (still need some for movement reporting)
• Supports network level planning and control
• Customer still cannot receive predictions of
  wagon arrivals
• Still no ability to forecast future workloads

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Maturity Level 5 Shipment (Wagon) Scheduling
System
Movement Reporting System
Dated Timetable System
Shipment Scheduling Proactive Monitoring
System
Centrally Maintained Marshalling Plan by Yard
Waybill or Shipment Database with Movement Data
Current Shipment Schedules
Customer Shipment Status Projections
Yard Inventory and Workload Projections
Train Consist Projection System
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Shipment Schedules Are Key to Asset, Operational
and Customer Management

• Itineraries can be viewed two ways
• A series of train movements (shipment legs)
• A series of yard connections (connection events)
• Organizing the data by train provides train size
  projections
• Organizing the data by connection provides yard
  workload projections marshalling/train make-up
  instructions
• Monitoring against shipment schedule focuses on
  customer service and asset velocity
• Shipment schedules are also needed to support
  booking or capacity management systems

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Summary The Core Freight Railway Planning and
Control Systems
Operating Plan Design
Shipment Scheduling Monitoring Systems
Marshalling Yard Management
Train Calling Dispatching Systems
Movement Reporting Systems
Waybill Systems
Locomotive Management Systems
Train Consist Projection Systems
Crew Management Systems
Empty Wagon Distribution Systems
Yard Inventory Projection Workload Management
This structure/design was first established in
the 1960s/1970s by the TOP system at Southern
Pacific, and is largely unchanged in its
fundamentals following the addition of car
scheduling concepts by the Missouri Pacific in
the late 1970s/early 1980s.
While great for wagon load traffic, this
structure contains little planning and execution
support for block trains and large block bulk
traffic, tends to be weak for local pick-up
delivery, and treats intermodal and automotive
through band-aid add-ons.
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The Core Railway Planning and Control Systems in
a Broader ContextOver time the railway legacy
systems have grown in breadth and complexity,
such that they can be used to manage most aspects
of the railway
Line-of-Road Maintenance Management
Marketing Support Forecasting
Handheld/Remote Device Mgmt
Customer Service Interfaces
Equipment Maintenance
Reference Files
Interline Wagon Location Messages
HR Systems
Shipment Costing Systems
Interline Communications
Corporate Financial Systems
Intermodal Systems
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Freight Railway Operations Planning and Control
Systems Implications for IT strategy and
requirements
Trends in Railway Planning and Control Systems
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Progressing Beyond Maturity Level 5Existing
systems reflect their roots they are batch
network focused, and weak in their support of
block train, intermodal, and automotive operations

• Systems need expanded scope because narrow
  systems create stove pipes
• Stronger focus is required on customers demand
  aligning operations with customershipments and
  needs

• Customers must become partners in the fulfillment
  process
• Maximize role of customer in order processing,
  execution tracking, and payment processes

Seamless customer facing transportation
fulfillment systems
Customer based planning execution systems
Moving towards the railway of the future

• Stove pipes generate inefficiencies are costly
  andneed to be eliminated
• Coverage of systems must be expanded to include
  block trains, large block bulk operations,
  intermodal, automotive and local pick-up
  delivery

Seamless operations planning operations
execution systems
Integrated Asset management systems

• Railways need a better return on assets by
  improving asset management and velocity
• Management of many assets such as block train
  consists and intermodal equipment is not well
  supported by IT platforms

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Railways need to create a road map defining how
to reach the next levelHow do we create an
integrated IT Platform that can support planning
and delivery of contracted customer requirements?
An integrated IT platform should support all
aspects of railway operations
Local Train Service
Track Capacity
Customer Service Requirements
Crew Availability
Road Train Service
Yard Activities
Locomotive Availability
Wagon / Platform / Box Availability
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A Shift in Focus is Coming from Railway
Customers, Economics, and ManagementRailways
have been driving the demand for pro-active and
increasingly comprehensive planning and control
systems.
System Goals and Objectives
Capabilities and Focus

• Manage operational execution
• Train operations
• Yard operations
• Provide status information to support rolling
  stock management processes
• Provide status and projected movement information
  on shipments
• Manage capacity
• Drive asset velocity
• Meet customer service goals

• Traditional Focus
• Train operations
• Locomotive crew management
• Wagon location/yard management
• Evolving Focus
• Shipment/wagon velocity
• Customer service compliance
• Wagon routing plan efficiency
• Train make-up plan efficiency

Railway economics and management are forcing
increased focus on velocity, efficiency and asset
utilization
Pro-active monitoring of system performance and
to ensure operational quality
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Evolving Focus Evolving System
RequirementsEffectively meeting these evolving
objectives requires a suite of planning and
control system capabilities.
Elements of the Operating Plan

• Classification strategies
• Train routing and block-to-train assignments
• Train schedules or scheduling guidelines
• Empty wagon distribution policy
• Yard performance standards
• Block train planning
• Capacity Management

• Local pickup and delivery standards
• Origin-to-destination trip time standards
• Resource management issues
• Locomotive assignments
• Assignments of yard, local, and road crews
• Support personnel scheduling

Understanding the evolving needs of major
railways represents a critical issue.
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Future Direction of Railway Planning and Control
SystemsIn the future, railways will look to
planning and control systems to address an even
greater array of issues that encompass supporting
processes, inter-railway coordination and
customer issues.
Supporting Railway Processes
Inter-Railway Coordination
Customer Communication

• Capacity management and Yield Management
• Intermodal shipment and ramp management systems
• Block train equipment cycle management
• Tactical decision support systems
• Optimized computer aided dispatching
• Automated equipment location detection systems

• Wagon location status messages
• Inter-railway blocking instructions
• Inter-railway advanced train consists
• Projected times of interchange
• Electronic tariffs waybill transmission
• Wagon hire cost settlements
• Off-line wagon maintenance management

• Web-based shipment tracking and tracing
• Web-based wagon order placement
• Web-based price quotations
• Web-based product catalog with dock-to-dock
  shipment times

Needs will not be universal some railways
already have internally developed capabilities to
address specific requirements
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Future Directions Example Capacity
Reservations Systems and Yield Management
Feed from planning system
Status monitoring (shipment tracking change
management
Wagon trip plan generator
Date specific operating plan database
Feed of changes made in execution system
Booked traffic database (includes waybills
itineraries)
Reservation acceptance module
Reservations support for empties, unit trains,
interchange received wagons
Feed of plan to execution system
Wagon capacity tracking database (yards trains)
Wagon capacity allocation user interface
Forecasting / non-reserved wagon capacity
information
Pricing and yield management information
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Future Directions Example Core Real Time
Concepts

• Potential Real Time Architecture/Components

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Future Directions Example Internet Capabilities

• Web-based shipment tracking tracing
• Web-based car order placement
• Web-based price quotations
• Web-based product catalog with dock-to-dock
  shipment times

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Core Railway Systems Replacement is a Hugely
Expensive PropositionAny strategy or roadmap
must take the replacement costs and risks into
account, while being well grounded in the
practicalities of running a 24/7 railway

• Below is anecdotal, and not fully confirmed, but
  believed to be largely accurate
• Santa Fe spent multiple years, and over 100m in
  1980s dollars replacing its core systems
• Canadian National purchased the Santa Fe system
  for order 100m, and spent another 100m to adapt
  it over a multiple year period
• When Burlington Northern merged with Santa Fe,
  upgrading their system to handle the full scope
  of the new network meant acquiring the Canadian
  National version, and spending 100m to upgrade
• Canadian Pacific purchased the NS software suite,
  and upgraded it to their needs process took in
  range of 5 to 10 years, and cost well over 100m
• The KCS development of a new system required in
  the range of 5 to 10 years to develop, and is
  believed to have cost a similar amount to develop
  as other solutions cited above
• Union Pacific is replatforming its TCS system
  into a series of mid-tier applications, on a time
  scale of 5 to 10 years, and at an expected cost
  that is believed to be in excess of 100m
• While have limited data points in Europe, SNCF
  has spent many millions developing a new customer
  booking and block train management system, with
  limited success

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Replatforming is an Opportunity to Rethink Core
System FunctionalityWith the rise of block
trains and intermodal, most core transportation
systems are capable of fully meeting the needs of
less then 50 of a railways traffic

• When originally created, these systems were
  focused on the general wagonload business. As a
  result they did little to support either block
  trains or intermodal, which now represents
  between 30 and 70 of a railways traffic.
• Example The classification and trip planning
  functions of most systems do not apply to block
  train traffic. Result is that this traffic must
  be handled manually.
• Many of these systems are also incomplete with
  respect to local pick-up and delivery services,
  requiring both guesswork and manual intervention
  to plan and manage these activities
• Above are just two examples of functionality gaps
  based on Oliver Wymans direct experience other
  similar issues are likely to be identified in any
  more in-depth analysis
• To identify where the opportunities lie in
  improving capabilities and coverage, the roadmap
  development process must reflect not just what
  components currently exist, but also what
  capabilities and functions are missing from a
  business management perspective
• Understanding the railway business, operations,
  and systems at a deep level is critical to doing
  this evaluation

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Freight Railway Operations Planning and Control
Systems Implications for IT strategy and
requirements
Representative Evaluation of Existing IT Systems
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A Functional Assessment Can Help Focus Future IT
RequirementsOliver Wyman can support railways in
helping to identify the scope, functionality, and
order of importance of business application
changes

• To be effective, such an assessment must
• Incorporate an understanding of the overall
  railway business to inform the process with
  respect to the areas in need of support
• Include a look at the future nature of the
  business to understand the potential changes to
  the business requirements
• Understand the current solution methodologies,
  and the potential future or alternative
  methodologies so that we do not simply recreate
  existing systems on new platforms
• Understand the role that technology can play in
  changing the nature of the business, and how
  business requirements are satisfied
• The following slides depict the client functional
  areas and business areas that could be included
  in a systems support assessment
• Diagrams indicate the coverage of current support
  systems within defined areas of interest based on
  our rough understanding of the situation of a
  representative railway
• Larger red ovals denote examples of the
  functional and business areas that might need to
  be addressed in common to take a railways IT
  platform to the next level

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Sample Assessment of Planning SupportBelow are
examples of the types of areas that need to be
examined, the issues that are likely to arise,
and a representation of the current state of the
IT systems
------ Illustrative ------
Expand train and block planning to include all
business units as well as local service
Create an equipment distribution model for fleet
sizing allocating wagons to customers/services
Create a tactical train management model which is
used for planning last minute extra trains, train
annulments, and train consolidations
Create Locomotive distributions system for power
allocations
Create a track time allocation model for
planning train services and maintenance of way
Implement true systems support for both local
pick-up delivery and overall terminal workload
planning and management
Create Intermodal cycle planning for platforms
and power
Develop mechanisms to determine when to create
solid bulk trains and when to move in wagonload
system
Representative Areas for Exploration
Develop a 0 to 10 day rolling horizon resource
management and scheduling system for block train
operations
Create Block Train cycle planning for both
planned and ad hoc train services
Develop empty multilevel support systems that
integrate with reload program and blocking/train
scheduling process
Note The icons on this chart are examples and do
not necessarily represent a specific railway
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Sample Assessment of Operations SupportBelow are
examples of the types of areas that need to be
examined, the issues that are likely to arise,
and a representation of the current state of the
IT systems
------ Illustrative ------
Improve visibility of car-to-block assignments
for received run-through trains
Create a tactical schedule repair system to
manage and limit off scheduled operations
Improve visibility of physical interchanges (vs.
waybill interchanges) in shipment management
process
System also manages real-time interline
connections
Representative Areas for Exploration
Create an integrated crew calling system based on
the consolidated train service and maintenance of
way schedules
System also manages the mainline arrival lineups
with yard capacity and the departure lineup
w/mainline capacity
Implement shipment scheduling and workload
forecasting for block trains intermodal
Real time consist management, tactical planning,
and repair support eliminate ad hoc management
of block train empties
Build an integrated local crew management system
combined with work-order development and local
service profiling process
Note The icons on this chart are examples and do
not necessarily represent a specific railway
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Sample Assessment of Customer Service
SupportBelow are examples of the types of areas
that need to be examined, the issues that are
likely to arise, and a representation of the
current state of the IT systems
----- Illustrative -----
Consider implementing an advance booking system
to more effectively manage demand and capacity
Create a dynamic equipment ordering system that
integrates equipment availability into load
acceptance process
Implement DSS to use pricing policies to shift
bulk demand to allow greater use of wagonload
network on off-peak days
Integrate system to track consist availability
with order acceptance process
Representative Areas for Exploration
Create an integrated price point system including
demand forecasting yield management
Test fit with overall plan when accepting ad hoc
block train orders price accordingly
Examine potential changes to intermodal order
management process to track capacity, multiple
service levels, and integrate with load
acceptance and pricing process (yield management)
Note The icons on this chart are examples and do
not necessarily represent a specific railway
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Freight Railway Operations Planning and Control
Systems Implications for IT strategy and
requirements
Potential Roles for Oliver Wyman
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Characteristics of the Railway IT Platform of the
FutureTechnological and business process change
is required to move from a stovepipe mind set
to a dynamic enterprise level view.
Key question How will changes in the marketplace
impact the nature of the business over the next
20 years? For example will highway congestion
and high fuel prices cause a rise in short haul
business including intermodal, or the on-shoring
of some industrial production?
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The Roadmap for the FutureSuccessfully moving
towards the railway of the future requires
understanding the objective and assembling a team
to define the road map

• Building an effective road map requires
• Understanding the IT enterprise platforms needed
  to successfully operate in the future
• Knowing how to best interconnect the application
  software to provide improved future solutions
• Understanding the rail transportation environment
  and having a good understanding of how it is
  likely to change
• Understanding current and future business needs
  and how those needs relate to application
  functionality
• Assembling teams to address these issues requires
  two diverse types of support
• Large system integration houses are the most
  knowledgeable and best positioned to address the
  first two issues
• Understanding the IT enterprise platforms
• Knowing how to best interconnect the application
  software
• Industry specialty firms with strong IT and well
  rounded rail industry knowledge are best
  positioned to address the second two issues
• Understanding the current and future rail
  transportation environment
• Understanding current and future business needs
  and how they relate to application functionality

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Oliver Wyman is Uniquely Positioned to Support
the Assessment ProcessBy providing valuable
assistance in addressing the following types of
questions

• How will intermodal change as fuel becomes more
  expensive?
• How will the railway customer mix change over
  time?
• How will going green affect a railways
  profitability?
• How will shifts in sourcing and global trade
  impact the business?

• What types of additional information will
  customers expect the railway to provide?
• Will customers become more proactive users of
  railway provided systems?
• What internal processes are needed to support new
  services?

• Can the current applications support the
  railways future needs?
• Are new applications needed to adequately address
  new or existing requirements or replace current
  systems?
• What solution methodologies should be included in
  either the new or revamped applications?

• How long can existing applications be used?
• When should applications be retired?
• When should new applications be created?
• When should existing applications be modified?

Representative Questions
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